Patent Dispute Resolved

Sep 12, 2005—When Intermec Technologies first announced it was suing Matrics, a startup later acquired by Symbol Technologies, I received a phone call from a journalist at a mainstream business publication. "Isn't this a huge setback for RFID adoption?" she asked. I told her I didn't think so and that intellectual property disputes are part of doing business for any technology company. The news last week that the two parties had settled, and that Symbol had signed on to Intermec's licensing program (see Intermec, Symbol Reach Major Agreement) is ample evidence that the RFID industry, like others, is dealing with the IP issue.

The resolution of this patent dispute is good news for both technology providers and end users. It gives technology companies with IP the information they need to develop their own IP strategy now. Were the Intermec-Symbol dispute to drag through the courts for a couple of years, other vendors might hesitate to commit to a position on their own IP. What vender would want to pay for the right to license the use of patented technology if Symbol won its suit and Intermec's patents were found to be invalid?

The resolution is also good news for end users because it’s now clear that the vendor community is taking the IP issue seriously and are working to resolve it. Vendors want to ensure that the products they market will not be subject to lawsuits. That's something no end user wants. The resolution of the dispute suggests the adoption of RFID in the global supply chain will not be hindered by patent issues, so companies can make their plans for rollouts without worrying that adoption will suddenly stall.

Keep in mind that the Intermec-Symbol resolution affects only these two companies, so it does not guarantee the IP issue won't become a spanner in the works. While 19 companies recently announced that they agreed to join (see 19 Firms Join Intermec Licensing Program), there are a few companies noticeably absent from the 19 that have so far agreed to license Intermec's patents, including Alien Technology, Impinj and Philips Semiconductors. Other suits could be filed, and the situation could become uncertain again. But my guess is that as second-generation Electronic Product Code technologies start to hit the market, vendors will be under pressure to clarify their position. All things being equal, end users would rather buy products from companies that can demonstrate they have no patent issues surrounding their products.

Clarifying one's position won't be simple, because more than 4,000 RFID patents have been issued globally. Even if a technology provider licenses Intermec's patents, it still has to deal with patents owned by Alien, Impinj, Philips and many others. One possible solution to this problem is the RFID patent pool being created by several RFID vendors (see RFID Vendors to Launch Patent Pool). I still believe that a pool in which all members share revenue from one royalty on RFID products, based on the importance of their patents, is a good way to deal with the many existing RFID patents.

I've heard some people say a patent pool would favor big companies at the expense of smaller IP holders. If the pool is set up properly and a panel fairly evaluates the importance of the patents submitted to the pool, however, then a patent pool would clearly benefit the smaller companies. Why? Well, for one thing, if you are a startup with a patent, it's a lot easier to join a pool than take a big company, such as Intermec, Symbol or Texas Instruments, to court if you think it’s infringing on your patent.

It's not clear how the patent issue will play out over the next few months. Perhaps the patent pool will catch on. Perhaps vendors will strike cross-licensing deals one at a time. Or maybe some vendors will take the issue to the courts. In the end, it's not important how the IP issue is resolved. What's important is that it is being resolved.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below.

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